If you are buying a property as an investment, and intend to lease the property, you may decide to buy a property that already has a tenant. This raises some additional legal issues that are different from buying a tenant-free property.
Where there is a tenant occupying a property, with a current lease, the purchaser will take over the role of the landlord as soon as settlement of the property purchase is effected.
You will not need to enter a new lease with the tenant; the current lease remains valid. This does mean however, that you will be bound by the terms of that lease. This obligation may mean that you can negotiate the terms of sale with the seller of the property more favourably.
Where the tenant remains in the property, the rent due by the tenant may need to be apportioned between buyer and seller. Where the tenant pays rent in advance, the seller may deduct this from the sale price to reflect rent already paid to them by the tenant.
However, where the rent is in arrears no adjustment will need to be made. It is unfair to expect the purchaser to take on debts of the seller.
It is also common to have the managing agent or letting agent deal with apportionment of rent as they may be the ones in charge of collecting rent to pass on to the landlord, and may be holding the rent in their trust account. Szabo & Associates Solicitors can help with determining how and what adjustments are made to any rent payments in respect of purchasing property with an existing tenant.
Conveyancing and Property Law in Sydney and New South Wales
If you are considering buying a property with an occupying tenant, or for any other property and conveyancing issues Szabo & Associates Solicitors can provide expert advice and assistance.
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Contact us now and speak to one of our expert property law and conveyancing solicitors on 02 9281 5088 or book a consultation.